How much does the account holder lose in the event

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Reference no: EM132943691

Nambia is an African country with the unit of currency of the Namib with 350 namibs [µ]equal to $1.00 and 420µ equal to £1. Nambia has a deposit insurance system that provides for coverage up to a limit of 12,000,000µ per all eligible accounts in aggregate per bank. Not all accounts are covered by the Nambian deposit insurance system, which specifically excludes CD's with maturities in excess of 1 year and all inter-bank accounts. However, foreign currency accounts are included within the overall limit.

Suppose that an account holder has the following exposure in a bank that failed:

Savings Account = 350,000µ

Current Account = 350,000µ

CD (I year) = 250,000µ

CD (2 year) = 1,500,000µ

Foreign Currency Account-1: $1500

Foreign Currency Account-2:£500

Problem 1: If there is currently no coinsurance in Nambia, how much can the account holder recover and how much does the account holder lose in the event that the bank goes insolvent? Express in both monetary amounts and percentage terms.

Reference no: EM132943691

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